Mixed Signals: China’s PBoC Doesn’t Recognize Digital Currencies Like Bitcoin, But Are They Looking to Create Their Own?
Speaking at a press conference on the sidelines of the annual session of the National People’s Congress, Zhou Xiaochuan, the governor of the People’s Bank of China (PBoC), made it clear that the country does not recognize Bitcoin and other digital currencies like it does traditional banking tools such as paper money, coins, and credit cards: “The banking system does not accept it.”
Xiaochuan added that direct trading between Bitcoin and yuan is not supported by the central bank, and also made comments that represent a sort of philosophical or cultural view regarding money, saying:
“We don’t like speculative cryptocurrency products since it is not a good thing to give people an illusion of getting rich overnight.”
Xiaochuan’s statement comes after months of negative sentiments from Chinese authorities, including the PBoC, who have taken a series of steps to clamp down on the cryptocurrency market both domestically and internationally.
In another interesting turn, and in sharp contrast to the attitudes of many other governments and large corporations across the globe, Xiaochuan warned that even an expansion of blockchain and distributed ledger technologies may have a negative impact on consumers — adding that it could also bring some unpredictable effects on financial stability and monetary policy transmission.
Digital Currency For Electronic Payment
That said, the country is developing some crypto-related plans: a few weeks ago Xiaochuan announced that the PBoC is planning to launch a digital currency called DCEP, or Digital Currency For Electronic Payment. The digital currency is expected to go through initial test phases in 2019. As of now, it’s not certain whether this digital currency will take the form of a cryptocurrency or perhaps just utilize blockchain-technology.
Any potential development of a digital currency must suit the needs of the country, Xiaochaun declared. These being a digital currency that focuses on “convenience, rapidity, and low cost in a retail payment system, while taking into account security and protection of privacy.” They should also not conflict with the current financial order, Xiaochuan added.
The governor pointed out that PBoC had organized digital currency related seminars more than three years ago. That was followed by the establishment of a research institute for blockchain technology. Just a year ago, PBoC executives had spoken in favor of digital currencies.
And just last week a delegation of Chinese technology leaders visited Australia to explore the implementation of blockchain into the fintech industry. The delegation was comprised of top-level Chinese companies, including Ant Financial, WeBank, JD.com, ZhongAn, Wanxiang, and OnChain.
As of now it’s hard to pinpoint hardline truths regarding the country’s real attitudes towards cryptocurrencies considering the mixed signals that the Chinese government and central bank has been sending the crypto and blockchain communities. It look as though the country will continue to shy away from cryptocurrencies like Bitcoin, though they may be interested in further applying blockchain-based technologies, perhaps even using them to underpin a state-sponsored digital currency in the future.